And in the end, the cryptos win. This is the conclusion of a bitter fight that was given last night. A long-running fight between the US regulator and the Ripple companyissuer of the token XRP. Even if each of the two camps seems to have won a good point in the decision rendered by the Judge Torres, it is indeed XRP and the altcoins as a whole that emerge victorious. Explanations.
Justice has decided: XRP is not a security
Since December 2020, Ripple has been fighting a lawsuit that has already cost it hundreds of millions of dollars. sued by the DRY (Securities Exchange Commission), the company was accused of having sold financial securities (securities in English) not recorded. The regulator thereby accuses Ripple of having sold its XRP token without prior registration.
A token that the SEC considers as an action therefore. Except that in the law, nothing is defined about cryptos, these could be stocks like anything else.
Last night, after a year and a half of battle, the judge ruled. No, the XRP token is not a stock in accordance with the law. This decision is crucial, because it will be binding on all the other trials to come. Ripple is one of the most centralized organizations in the crypto sphere.
If XRP is not a stock, then the majority of other cryptos are not either. And in fact, the heavy and restrictive regulations of the SEC do not apply. A meaningful and liberating decision for the sector.
Of course, the price of the XRP token soared by performing almost +100% over the day. Behavior not seen since the previous bull run for a crypto with such capitalization. That is to say if this moment was expected. Brad Garlinghouseboss of Ripple, welcomed the news on Twitter.
“We said in December 2020 that we were on the right side of the law, and we will be on the right side of history. I thank everyone who helped us reach this decision [de justice] Today. A decision [qui compte] for crypto innovation in the USA. »
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If XRP is not a financial security, then neither are ETH and BTC
In practice, however, the court decision is more nuanced. The XRP token is indeed considered a security in the event that the token sale was carried out over the counter (Over the Counter or OTC) with institutions. On the other hand, XRP is not considered as a financial security for all that concerns the sales via the exchanges, like Binance for example.
Clearly, if a crypto is sold on the market, then it is not a financial security. Brad Garlinghouse precisely highlights this part of the decision rendered, which is extremely important.
“XRP, as a digital token, is not inherently [un contrat, une transaction, un schéma] that meets the criteria [du test] of Howey on investment contracts. »
So, the 3e Howey’s test law, on which the SEC bases itself to qualify cryptos as financial securities, would not be legally applicable. What potentially put a stop to all the attacks carried out by Gary Gensler against the sector since the beginning of the year. Hence the feeling of victory that has gripped the entire crypto sphere.
“This is mostly a very good sign for the alts, and a surprise win for XRP. (…) Selling tokens via exchanges is allowed [par la justice]. (…) If XRP is not a financial security, almost [aucune crypto] sold on exchanges is not. »
Gary Gensler, the boss of the SEC, must be doing the soup right now. Because its vendetta against the sector has just suffered a setback as sudden as it is disconcerting. Its legitimacy to continue to attack the sector has just been called into question by the courts. He should probably have a hard time refusing the countless requests for Spot Bitcoin ETFs which have just emerged in a group in June, under the impetus of the giant BlackRock.
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